Opinion · Court of Appeals for the Second Circuit

Smith v. D. A. Schulte, Inc.

91 F.2d 732

Type
Opinion
Court
Court of Appeals for the Second Circuit
Jurisdiction
Federal
Date
1937-06-28
Topic
general

PER CURIAM. This appeal presents only one variant upon Central Manhattan Properties, Inc., v. D. A. Schulte, Inc., of New York (C.C.A.) 91 F.(2d) 728, handed down herewith.

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SMITH v. SCHULTE, INC., OF NEW YORK,91 F.2d 732(2nd Cir. 1937)
SMITH et al. v. D.A. SCHULTE, Inc., OF NEW YORK.
No. 345.
Circuit Court of Appeals, Second Circuit.
June 28, 1937.
Appeal from the District Court of the United States for the Southern District of New York.

Reorganization proceedings under § 77B of the Bankruptcy Act, 11 U.S.C.A. § 207, in the matter of the Schulte Retail Stores Corporation, debtor, D.A. Schulte, Inc., of New York, D.A. Schulte, Inc., a Delaware corporation, and Schulco Company, Inc., a New York corporation, subsidiaries, wherein Lee T. Smith and another, as trustees of Schulco Company, Inc., filed a claim for subrents, which became due and owing prior to the date of filing the petition for reorganization, on properties of which Schulco Company, Inc., was over-landlord and D.A. Schulte, Inc., of New York was tenant. From an order in bankruptcy of the District Court for the Southern District of New York expunging their claim, claimants appeal.

Order reversed, and claim allowed in accordance with opinion.
Rosenberg, Goldmark Colin, of New York City (Max Freund and Paul A. Landsman, both of New York City, of counsel), for appellants.

Jerome Eisner and Ernst, Gale, Bernays Falk, all of New York City (Henry I. Fillman, of New York City, of counsel), for appellee.
Before L. HAND, SWAN, and CHASE, Circuit Judges.
PER CURIAM.
This appeal presents only one variant upon Central Manhattan Properties, Inc., v. D.A. Schulte, Inc., of New York (C.C.A.)91 F.2d 728, handed down herewith. The lessor, Schulco Company, Inc., mortgaged some of the parcels of land in question to the Central Hanover Bank Trust Company, together "with the right to receive all rents due or to become due thereunder." The debtor argues that this passed title to the rents out of the lessor. That is plainly untrue; the transfer was nothing more than a mortgage of future rents, and it is well settled in New York that until the mortgagee gets a foreclosure receiver, or the equivalent, the rents belong to the mortgagor. Sullivan v. Rosson,223 N.Y. 217,119 N.E. 405, 4 A.L.R. 1400; In re Brose, 254 F. 664 (C.C.A.2); In re Kings County Real Estate Corp.,67 F.2d 895(C.C.A.2); Walker v. Irving Trust Co.,73 F.2d 270(C.C.A.2); Prudential Ins. Co. v. Liberdar Holding Co.,74 F.2d 50(C.C.A.2); In re Humeston,83 F.2d 187(C.C.A.2).

Order reversed; claim allowed for fourteen-fifteenths of the subrents.Page 733